Half Yearly Report

30 July 2015

H1 2015 Results

Financial Summary

• Total H1 Revenue up 1%; Core Gross margin over 83%, up 1% point
• Robust top-line performance, supported by externalisation, underpins accelerated investment in R&D to progress pipeline, up 24% in H1
• Core SG&A efficiency programme - early progress: Core SG&A 35% of Q2 Total Revenue (Q4 2014: 44%)

-         Sales & marketing effectiveness, centralisation of functions, process improvements, third-party spend, further efficiencies across support areas, footprint optimisation

• Core H1 EPS stable, up 3% in Q2, enhanced by one-off tax benefit
• FY 2015 Total Revenue guidance at CER improved: Now expected to decline by low single-digit percent (prior guidance - mid single-digit). Core EPS guidance at CER is unchanged: Expected to increase by low single-digit percent, reflecting the continued accelerated investment in R&D
• The Board recommends an unchanged first interim dividend of $0.90

H1 Commercial Highlights

Growth platforms grew by 11%, representing 56% of Total Revenue:

1. Brilinta/Brilique: +42%. Achieved 10% new-to-brand prescription market share in the US
2. Diabetes: +32%, including 88% sales growth in Emerging Markets
3. Respiratory: +9%, ahead of market growth. Q2 sales up 11%
4. Emerging Markets: +14%. China sales growth of +19%
5. Japan: +2%, with Q2 sales growth of +6%

Achieving Scientific Leadership: Progress since the prior results announcement

Pascal Soriot, Chief Executive Officer, commenting on the results said:

“We made good progress in the period, delivering a robust underlying business performance. This represents six successive quarters of top-line growth. The initiatives introduced to increase efficiency are starting to reduce SG&A costs, supporting our continued strategic investment in science and the acceleration of our pipeline which has positive momentum across all key areas.

I’m particularly pleased by the pace of progress in Oncology, with new approvals for both Iressa and Faslodex accompanied by regulatory submissions for AZD9291 and cediranib. The strong performance of the growth platforms and the subsequent upgrade to top-line guidance, together with increased R&D productivity reaffirm the confidence we have in our ability to navigate the final impacts from the loss of exclusivity and meet our revenue targets.”

Notes

1. All growth rates are shown at constant exchange rates (CER) unless specified otherwise.
2. Total Revenue defined as Product Sales and Externalisation Revenue. For further details on the presentation of Total Revenue, see the announcement published by the Company on 6 March 2015.
3. See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

Results Presentation

A presentation for investors and analysts, hosted by management, will begin at midday BST today. The accompanying live webcast can be accessed via www.astrazeneca.com/investors.

Reporting Calendar

The Company intends to publish its nine months and third quarter financial results on 5 November 2015.

About AstraZeneca

AstraZeneca is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

Key: RIA - Respiratory, Inflammation and Autoimmunity, CVMD - Cardiovascular and Metabolic Disease,

ING - Infection, Neuroscience and Gastrointestinal

Research and Development Update

________________________________________________________________________________

A comprehensive update of the AstraZeneca development pipeline is presented in conjunction with this announcement and can be found later in the document.

Progress since the prior results announcement on 24 April 2015:

**Squamous Cell Carcinoma of the Head and Neck

In the period 2015-2016 AstraZeneca anticipates 12-16 Phase II starts, 14-16 NME and major line-extension regulatory submissions and 8-10 NME and major line-extension approvals.

1. Respiratory, Inflammation and Autoimmunity (RIA)

Significant progress continues to be made in the RIA pipeline, which now includes seven programmes in pivotal studies or under registration. AstraZeneca holds a unique position in respiratory disease, including asthma, chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF), with a range of differentiated potential medicines in development by leveraging novel combinations, biologics and devices. The pipeline also has a number of promising assets in inflammatory and autoimmune diseases within areas such as psoriasis, psoriatic arthritis, gout, systemic lupus and rheumatoid arthritis.

AstraZeneca and Ardea Biosciences had a strong presence at the recent European League Against Rheumatism annual meeting, with 24 abstracts accepted. Data were presented on several investigational molecules including lesinurad (gout), mavrilimumab (rheumatoid arthritis) and brodalumab (psoriatic arthritis).

a)     PT010 (COPD)

The first patient has been dosed in the Phase III programme for PT010, a combination of budesonide, glycopyrronium and formoterol fumarate (BGF) in development for patients with moderate to severe COPD. PT010 has the potential in a number of markets to be the first fixed-dose triple-combination medicine to be delivered in a pressurised metered-dose inhaler using the unique porous particle co-suspension technology developed by Pearl Therapeutics, acquired by AstraZeneca in 2013.

The Phase III ETHOS trial is assessing a twice-daily investigational formulation in more than 8,000 patients with moderate to severe COPD over the course of 52 weeks. More than 750 centres in over 25 countries are expected to participate in the trial.

ETHOS is a randomised, double-blind, multi-centre, parallel group trial assessing efficacy and safety of BGF relative to two active comparators - a fixed-dose combination of the budesonide and formoterol fumarate and a fixed-dose combination of glycopyrronium and formoterol. The primary endpoint is the rate of moderate or severe COPD exacerbations.

b)    Anifrolumab (lupus)

The first patient has been dosed in the Phase III programme for anifrolumab, a first-in-class investigational medicine for patients with moderate to severe systemic lupus erythematosus (SLE, or lupus), and the only anti-type-I IFN receptor approach currently in development. The Phase III TULIP programme includes two clinical trials that will evaluate the efficacy and safety of anifrolumab versus placebo in subjects with moderately to severely active, autoantibody-positive SLE, while receiving standard of care (SoC) treatment. The programme will assess the effect of anifrolumab in reducing disease activity (as measured by the SRI-4), decreasing use of oral corticosteroids, improving skin manifestations (as measured by CLASI) and reducing flares.

Anifrolumab has been developed with a biomarker test based on the type-I IFN-inducible gene signature, which is also being investigated as part of the clinical programme. The Company intends to present full anifrolumab Phase IIb data at the American College of Rheumatology congress in November 2015.

c)     Benralizumab (severe asthma)

The Phase III benralizumab trials CALIMA and SIROCCO have completed enrolment. These trials are designed to evaluate safety and effectiveness in actively reducing exacerbations in patients with uncontrolled asthma. The trials also assess lung function, asthma symptoms and other asthma-control measures, as well as emergency room and hospitalisation rates.

d)    Tralokinumab (severe asthma)

In May 2015 AstraZeneca announced that it had entered an agreement with Abbott Laboratories, Inc. (Abbott) to develop companion diagnostic tests to identify patients with severe asthma most likely to benefit from tralokinumab. No companion diagnostic blood tests have yet been approved for use in asthma.

Under the terms of the agreement, Abbott will develop and commercialise diagnostic tests to measure serum levels of the proteins periostin and dipeptidyl peptidase-4 (DPP-4), identified as potential predictive biomarkers of up-regulated IL-13 in severe asthma. The tests will be developed in conjunction with the Phase III trials of tralokinumab as a potential treatment for patients with severe, inadequately-controlled asthma.

e)     Brodalumab (psoriasis)

In May 2015 Amgen, Inc. (Amgen) announced the termination of its co-development and commercialisation agreement with AstraZeneca for brodalumab, an investigational IL-17 receptor monoclonal antibody in development for patients with moderate-to-severe plaque psoriasis, psoriatic arthritis, and axial spondyloarthritis.

AstraZeneca has conducted an initial evaluation of the data, which confirms that brodalumab demonstrated strong efficacy in psoriasis and indicates that the observations of suicidal ideation and behaviour are unlikely to be causally related to brodalumab therapy. Whilst continuing the transfer of the programme from Amgen, the Company is proceeding with a full analysis and evaluating potential partnering options in parallel. AstraZeneca will communicate its definitive decision in due course.

1. Cardiovascular and Metabolic Disease (CVMD)

AstraZeneca's strategy in CVMD focuses on ways to reduce morbidity, mortality and organ damage by addressing multiple risk factors across cardiovascular (CV) disease, diabetes and chronic kidney-disease indications. The patient-centric approach is reinforced by science-led life-cycle management programmes and technologies, including early research into regenerative methods.

Reporting results of the Company’s research and development in diabetes, AstraZeneca presented 86 abstracts at the recent American Diabetes Association (ADA) annual meeting. These abstracts included clinical trial data evaluating Farxiga/Forxiga, Bydureon, Byetta and Onglyza, as well as the investigational combination of Onglyza and Farxiga/Forxiga.

Notable late-breaking abstracts included data from a positive Phase III trial comparing the efficacy and safety of Farxiga/Forxiga versus placebo as an add-on to Onglyza and metformin immediate release in adults with type-2 diabetes who had inadequate glycaemic control. The trial met its primary endpoint.

a)     Brilinta/Brilique (CV disease)

In April 2015, AstraZeneca announced that the FDA had accepted a supplemental new-drug application (sNDA) and granted Priority Review for Brilinta for patients with a history of prior MI. The sNDA was based on the results of PEGASUS-TIMI 54, a large-scale outcomes trial in more than 21,000 patients that investigated Brilinta plus low-dose aspirin, compared to placebo plus low-dose aspirin, for the chronic secondary prevention of atherothrombotic events in patients who had experienced a heart attack one to three years prior to trial enrolment.

A Priority Review designation is granted to medicines that the FDA determines have the potential to provide significant improvements in the treatment, prevention or diagnosis of a disease.

b)    Onglyza (type-2 diabetes)

AstraZeneca is working closely with regulators as part of the ongoing review of the full SAVOR dataset. The Company is currently awaiting a forthcoming decision from the FDA on a possible label update for Onglyza and Kombiglyze XR respectively.

At the recent ADA meeting AstraZeneca announced results from an observational, retrospective trial which found no evidence of increased risk of hospitalisation for heart failure (hHF) with Onglyza, compared with sitagliptin, both of which are DPP-4 inhibitors, in patients with type-2 diabetes. A similar finding was obtained when comparing the overall DPP-4 class to sulfonylureas. The analysis included patients with and without prior CV disease and concluded that, among the latter, DPP-4 treatment was associated with a statistically-significant lower risk of hHF compared to treatment with sulfonylureas.

c)     SGLT2 Inhibitors (type-2 diabetes)

In May 2015, the FDA posted a Drug Safety Communication warning that sodium/glucose co-transporter-2 (SGLT2) inhibitors, the class to which Farxiga/Forxiga belongs and is used to treat type-2 diabetes, may lead to diabetic ketoacidosis (DKA), a medical condition where the body produces high levels of blood acids called ketones that may require hospitalisation.

Last month the European Medicines Agency (EMA) announced a review of SGLT2 inhibitors to evaluate the risk of DKA. The regulatory authorities will continue to investigate this safety issue and will determine whether changes are needed in the prescribing information for this class of drugs. AstraZeneca is committed to working with the FDA and EMA during their respective reviews of the data.

The DECLARE outcomes trial for Farxiga/Forxiga recently completed its global patient enrolment around one year ahead of plan. The DECLARE trial is a large CV outcomes trial designed to assess the impact of Farxiga/Forxiga on CV risk/benefit, when the medicine is added to a patient’s current anti-diabetes therapy, on CV events such as heart attack, ischemic stroke and CV-related death, compared with placebo. The trial involves the enrolment of around 26,000 patients with type-2 diabetes in more than 30 countries with the aim of randomising over 17,000 patients. It is an event-driven trial and is estimated to be completed in 2019.

d)    Tenapanor (chronic kidney disease)

In June 2015 Ardelyx, Inc. (Ardelyx) announced that it had entered into a termination agreement with AstraZeneca. Under the agreement all rights to Ardelyx’s portfolio of NHE3-inhibitors, including Ardelyx’s lead product candidate, tenapanor will be returned to Ardelyx.

1. Oncology

AstraZeneca’s vision in Oncology is to help patients by redefining the cancer-treatment paradigm, with the aim of bringing six new cancer medicines to patients between 2013 and 2020. A broad pipeline of next-generation medicines is focused principally on four disease areas - breast, ovarian, lung and haematological cancers.

As well as other tumour types, these are being targeted through four key platforms - immunotherapy, the genetic drivers of cancer and resistance, DNA damage repair, and antibody drug conjugates, underpinned by personalised healthcare and biomarker technologies.

AstraZeneca hosted an investor science event during the 2015 American Society of Clinical Oncology (ASCO) meeting in Chicago. Key presentations included:

• Data presented on durvalumab (formerly MEDI4736) as monotherapy in heavily pre-treated patients with non-small cell lung cancer (NSCLC) or SCCHN were encouraging and suggested that patients with PD-L1 positive tumours may have an improved overall response rate (ORR) compared to patients with PD-L1 negative tumours, highlighting the unmet medical need for the majority of tumours that are PD-L1 negative
• Data presented on durvalumab plus tremelimumab confirmed the Phase III trial dose and schedule for this combination. The combination demonstrated an ORR of 38% at doses selected for the Phase III trials versus a 5% ORR for patients receiving durvalumab monotherapy in the 1108 trial. The combination was well tolerated with a very low 7% drug-related discontinuation rate
• In addition, durvalumab is demonstrating strong potential to combine with small molecules

AstraZeneca has an extensive development programme underway across multiple tumour types and stages of disease, assessing the potential for immunotherapy to either replace or combine with traditional targeted and chemotherapy treatment. 

Today there are six AstraZeneca Oncology NMEs in pivotal studies or under regulatory review.

Highlights from the late-stage portfolio include:

Durvalumab and Ramucirumab (advanced solid tumours)

In May 2015, AstraZeneca and Eli Lilly & Company (Lilly) announced a clinical-trial collaboration to evaluate the safety and preliminary efficacy of durvalumab, in combination with ramucirumab, Lilly’s VEGF receptor-2 anti-angiogenic cancer medicine. The planned trial will assess the combination as a treatment for patients with advanced solid tumours.

A Phase I trial is expected to establish the safety and a recommended dosing regimen, with the potential to open expansion cohorts in various tumours of interest for the combination of durvalumab and ramucirumab. Under the terms of the agreement, the trial will be sponsored by Lilly.

1. Infection, Neuroscience and Gastrointestinal (ING)

a)     CAZ-AVI (serious infections)

In May 2015 the EU submission for CAZ-AVI was validated and accepted by the EMA.

CAZ-AVI is being developed to treat adult hospitalised patients with complicated intra-abdominal infections, complicated urinary tract infections or nosocomial pneumonia (including hospital acquired pneumonia and ventilated patients). Full Phase III results evaluating the safety and efficacy of CAZ-AVI for the global RECLAIM-1 and RECLAIM-2 studies and the global REPRISE trial were presented at the 25th European Congress of Clinical Microbiology and Infectious Diseases.

CAZ-AVI is anticipated as the first choice for the treatment of Gram-negative pathogens that are increasingly becoming resistant to prevailing standards of care, leading to greater numbers of life-threatening infections and additional healthcare costs.

b)    AZD3293 (Alzheimer’s disease)

AZD3293 is an oral, potent and selective small-molecule inhibitor designed as a novel treatment for patients suffering from early Alzheimer’s disease. A global co-development and co-commercialisation agreement was established with Lilly in 2014 for this important potential medicine.

Under the terms of the agreement, Lilly will pay AstraZeneca up to $500m in development and regulatory milestone payments. The first progress milestone was met in July 2015 and, as such, $50m of Externalisation Revenue from Lilly to AstraZeneca will be recognised in the third quarter.

Scientific Collaborations

______________________________________________________________________________

Montreal Heart Institute

AstraZeneca announced in May 2015 a collaboration with the Montreal Heart Institute in Quebec, Canada, to search the genomes of up to 80,000 patients for genes associated with cardiovascular diseases and diabetes, their complications and treatment outcomes. This is one of the largest such screens of its type to date and will drive understanding of the biological mechanisms underlying these conditions and their complications. The analysis will also uncover which genetic traits are linked to better treatment outcomes.

Corporate and Business Development Update

___________________________________________________________________________

a)    Haematology Collaboration with Celgene

In April 2015 AstraZeneca announced an exclusive collaboration agreement with Celgene Corporation (Celgene), a global leader in haematological cancers, for the development and commercialisation of durvalumab across a range of blood cancers including non-Hodgkin’s lymphoma, myelodysplastic syndrome and multiple myeloma.

Under the terms of the agreement, Celgene made an upfront payment of $450m in the second quarter to AstraZeneca. Celgene will lead on development across all clinical trials within the collaboration and will take on all research and development costs until the end of 2016, after which it will take on 75% of these costs. Celgene will also be responsible for global commercialisation of approved treatments. AstraZeneca will continue to manufacture and book all sales of durvalumab and will pay a royalty to Celgene on worldwide sales in haematological indications. The royalty rate will start at 70% and will decrease to approximately half of the sales of durvalumab in haematological indications over a period of four years. AstraZeneca may elect to opt out of funding part of any clinical study prior to its initiation, resulting in an increase of future royalty rates or a subsequent re-opt in payment.

Within the collaboration, durvalumab will be assessed both as monotherapy and in combination with other AstraZeneca and Celgene potential and existing cancer medicines. Over time, the collaboration has the potential to expand and include other assets.

b)    NKG2A Antibody Collaboration with Innate

AstraZeneca entered into a collaboration in the second quarter with Innate Pharma SA (Innate) to accelerate and broaden the development of Innate’s proprietary NKG2A antibody, IPH2201, including in combination with durvalumab. Currently in Phase II development, IPH2201 is a potential first-in-class humanised IgG4 antibody against NKG2A. NKG2A is a checkpoint receptor that inhibits the anti-cancer functions of Natural Killer and cytotoxic T-cells.

Under the terms of the agreement, AstraZeneca made an initial payment to Innate of $250m, which included the consideration for exclusive global rights to co-develop and commercialise IPH2201 in combination with durvalumab, as well as access to IPH2201 in monotherapy and other combinations in certain treatment areas for which AstraZeneca has the option to pay a further $100m prior to initiation of Phase III development. The agreement also includes additional regulatory and sales-related milestones. AstraZeneca will book all sales and will pay Innate double-digit royalties on net sales. The arrangement includes the right for Innate to co-promote in Europe for a 50% profit share.

c)    Joint Venture with Fujifilm Kyowa Kirin Biologics

In July 2015 AstraZeneca entered into an agreement with Fujifilm Kyowa Kirin Biologics Co., Ltd to establish a joint venture for the development and commercialisation of FKB238, a biosimilar version of bevacizumab, currently in Phase I development for the treatment of multiple solid tumours. The Company plans to use the biosimilar in combination with its portfolio of innovative oncology investigational and on-market medicines, across a range of cancers and at different stages of disease.

By developing an interchangeable biosimilar to support the Company’s combination-focused oncology strategy, AstraZeneca will explore potential new treatment options for patients, while at the same time keep the cost of those combination therapies low enough to enable access for the majority of patients.

d)    Entocort Divestment

In July 2015 AstraZeneca completed an agreement entered into with Tillotts, part of the Zeria Group, for the divestment of global rights, outside the US, to Entocort (budesonide), a gastroenterology medicine for patients with mild-moderate Crohn’s disease and ulcerative colitis.

Entocort is currently available in over 40 countries, with total product sales of $53m outside the US in 2014. A regulatory submission for Entocort in Japan is anticipated in the coming months. Under the terms of the agreement, Tillotts made an upfront payment to AstraZeneca of $215m upon completion of the transaction to acquire the rights to sell and develop Entocort capsules and enema formulations outside the US. The payment will be shown within Other Operating Income in the Company’s financial statements in the third quarter.

e)    Benralizumab: Japan

The Company recently announced an agreement with Kyowa Hakko Kirin Co. Ltd (Kyowa Hakko Kirin) for an exclusive option to commercialise benralizumab for asthma and COPD in Japan.

Benralizumab is a monoclonal antibody in Phase III development for the treatment of severe uncontrolled asthma and COPD. The results for benralizumab in severe asthma are expected to read out in 2016, with regulatory submissions anticipated later that year. Phase III results and regulatory filing in COPD are expected in 2018.

Under the terms of the agreement, the Company will make a $45m up-front option payment and may make subsequent payments for regulatory filing, approval and commercial milestones, and sales royalties should the option be exercised. Kyowa Hakko Kirin will continue to be responsible for the research and development of benralizumab in Japan. On exercising the option, AstraZeneca will be responsible for all sales and marketing in asthma and COPD in Japan. Kyowa Hakko Kirin will retain the rights to participate in certain commercial activities alongside AstraZeneca.

f)     Caprelsa Divestment

This month AstraZeneca announced that it had entered into a definitive agreement with Genzyme Corporation (Genzyme), part of Sanofi S.A., to divest Caprelsa (vandetanib), a rare-disease medicine. Caprelsa was granted Orphan Drug Designation by the US FDA in 2005 and is currently available in 28 countries for the treatment of aggressive and symptomatic medullary thyroid carcinoma, with global product sales of $48m in 2014.

Under the terms of the agreement, Genzyme will pay AstraZeneca up to $300m, including an upfront payment of $165m to acquire the global rights to sell and develop Caprelsa, and further development and sales milestone payments of up to $135m. The transaction does not include the transfer of any AstraZeneca employees or facilities. As an asset divestment, the upfront receipt and any subsequent payments will be reported in Other Operating Income in the Company’s financial statements.

g)    Creation of Antibiotics Business Unit

The Company recently announced the intention to create a new antibiotics business unit focused on the development of the late-stage pipeline of small molecules (CAZ-AVI, ATM-AVI and CXL) and on maximising the commercial potential of the portfolio of small molecule antibiotics (Merrem and Zinforo) across a number of prioritised markets.

The creation of a new, focused business unit is the best way to enable these important medicines to reach patients while further increasing the focus on the Company’s three main therapy areas. The creation of this new internal structure will have no impact on either the presentation of the Company’s financial statements or the Company’s biologics Infection business.

h)     Change In Senior Executive Team

Briggs Morrison, formerly Executive Vice President, Global Medicines Development and Chief Medical Officer, left the Company in June having accepted offers to become the Chief Executive Officer of Syndax Pharmaceuticals, Inc., a privately-held oncology company, and a Managing Director of venture capital firm, MPM Capital, Inc.

Pending the appointment of Dr Morrison’s successor, Elisabeth Björk, Vice President and Head of Development, Cardiovascular, Metabolism and Diabetes was appointed Interim Chief Medical Officer and took over operational leadership of Global Medicines Development, and Pascal Soriot became temporary Co-Chairman of the Late Stage Product Committee, the governance body accountable for post-Phase II investment decisions.

i)      Future Infrastructure

In the half the Company continued both with the construction of its new Global R&D Centre and Corporate Headquarters on the Cambridge Biomedical Campus and the move of employees to Cambridge from other UK locations.

AstraZeneca announced in the half that it will invest approximately $285m in a new high-tech facility for the manufacture of biological medicines in Södertälje, Sweden. The new plant will be focused on the filling and packaging of protein therapeutics. It is anticipated that the new facility will supply medicines for clinical-trial programmes from the end of 2018 and will deliver finished products for commercial use once fully operational by 2019.

Södertälje is home to AstraZeneca’s largest global tablets and capsules manufacturing facility and is also a launch-platform site for the Company, with specialist capabilities on-site that allow large-scale production of new medicines, working closely with the research and development organisation. By locating the new manufacturing plant in Södertälje, the Company will combine its expertise in biologics with the well-established culture of operational excellence that exists within the Sweden Operations unit.

Operating and Financial Review

_____________________________________________________________________________

All narrative on growth and results in this section relates to Core performance, based on constant exchange rates (CER) unless stated otherwise. Financial figures are in $millions ($m). The performance shown below covers the six and three month periods to 30 June 2015 (the half and the quarter respectively) compared to the six and three months to 30 June 2014 (the half and the quarter respectively). Core measures, which are presented in addition to Reported financial information, are non-GAAP measures provided to enhance understanding of the Company’s underlying financial performance. Core financial measures are adjusted to exclude certain significant items, such as:

− amortisation and impairment of intangibles, including impairment reversals but excluding any charges relating to IT assets

− charges and provisions related to our global restructuring programmes (this will include such charges that relate to the impact of our global restructuring programmes on our capitalised IT assets)

− other specified items, principally comprising legal settlements and acquisition-related costs, which include fair value adjustments and the imputed finance charge relating to contingent consideration on business combinations

More detail on the nature of these measures is given on page 72 of the 2014 Annual Report and Form 20-F Information.

Total Revenue

Total Revenue grew by 1% in the half to $12,364m. Based on actual exchange rates, Total Revenue declined by 6% reflecting the particular weakness of key trading currencies against the US dollar.

Product Sales

Product Sales declined by 2% in the half (Q2 2015: down by 1%) reflecting the US market entry of a Nexium generic product from February 2015 as well as an adverse impact from the change in accounting for the US Branded Pharmaceutical Fee following issuance of final regulations in Q3 2014.

Externalisation Revenue

Externalisation Revenue of $780m in the half (H1 2014: $352m) primarily reflected income from completion of the collaboration agreement in haematology with Celgene ($450m), together with income from the co-commercialisation agreement with Daiichi Sankyo Co, Ltd. (Daiichi Sankyo) for Movantik in the US ($200m), plus the co-commercialisation of Nexium in Japan ($55m), also with Daiichi Sankyo.

Product Sales

________________________________________________________________________________

The performance of a selection of key medicines is shown below. A geographical split of the performance is shown in Notes 6 and 7.

H1 Product Sales Summary

________________________________________________________________________________

During 2014, final regulations relating to the US Branded Pharmaceutical Fee were issued, affecting how the fee is recognised; AstraZeneca consequently accrues for the obligation as each sale occurs. As the fee is based on actual Product Sales in the current year, the fee is recognised as a deduction from Product Sales rather than a charge to SG&A, impacting individual brand sales by an average of 2%.

RIA

Symbicort

Product Sales in the half were stable at $1,687m. The brand continues to demonstrate strong differentiation in asthma reinforced by guidelines and ongoing lifecycle management in milder conditions.

In the US, the decline in the half to $717m was limited to 1% with continued lower net prices reflecting additional access and co-pay assistance. Symbicort’s share of total prescriptions for fixed-combination medicines increased in the half, growing by 0.7% points.

In Europe, Product Sales declined by 8% to $582m, reflecting increased competition from recently-launched analogue medicines. This performance contrasted with growth of 28% in Emerging Markets to $187m, notably with 64% growth in China where Product Sales reached $63m.

Pulmicort

Product Sales of Pulmicort in the first half were $518m, up 18%. Growth was driven primarily by the performance of Pulmicort Respules in Emerging Markets, which were up 37% at $303m. China Product Sales increased by 43% to $240m, reflecting sustained investment in supporting asthma and COPD patients for several years, both in hospitals and more recently at home.

In February 2015, the US District Court for the District of New Jersey ruled the patent protecting Pulmicort Respules in the US was invalid. The US Court of Appeals for the Federal Circuit subsequently affirmed the decision (see Note 5). Consequently a reduced level of sales-related receipts was realised in the second quarter (within Other Operating Income) from Teva Pharmaceutical Industries, Ltd.

Tudorza/Eklira

Product Sales in the half were $85m. This included $45m in the US, where the brand name is Tudorza, following the completion of the acquisition of the Actavis plc product rights in March 2015.

Rights were also acquired at that time for Daliresp, for which sales amounted to $39m in the half.

CVMD

Brilinta/Brilique

Product Sales in the half were $275m, up 42%, with consistent strong growth in each quarter.

Brilinta Product Sales in the US were $101m, up 60%. The brand’s weekly new-to-brand prescription market share achieved a new high of 10% in June 2015.

In Europe, Brilique continued to perform well, with an increase in Product Sales of 21% to $110m, reflecting indication leadership across a number of European markets. Emerging Market sales grew by 80% to $47m as the medicine remains in launch phase.

Onglyza

Product Sales were up 4% in the half to $391m. Growth of 19% in Q1 was offset by a 7% decline in Q2, reflecting a reallocation of promotional activities to Farxiga/Forxiga.

In the US, H1 Product Sales were down 16% at $211m driven primarily by destocking and competition in the

DPP-4 class, as well as the aforementioned changes in promotional activities. Product Sales in the Rest of World (ROW) were $180m, with growth in all key markets, notably in Europe where sales were $71m, up 23%. Product Sales in the half in Emerging Markets grew by 56% to $77m.

Bydureon/Byetta

Combined sales were $435m in the half, up 26%, with Bydureon representing 60% of total Bydureon/Byetta sales.

Product Sales in the US were $343m, up 28%. Bydureon total prescriptions grew 22% in the second quarter, reflecting the launch of the Bydureon Pen in September 2014. Most of the remaining sales of Bydureon/Byetta reside in Europe, where sales growth of 19% in the half reflected the ongoing successful Pen launch.

Farxiga/Forxiga

Product Sales were $205m in the half following the recent launch of the brand.

In the US, Product Sales of $115m compared to $26m in the comparative period. Additional promotional activity underpinned the growth of Farxiga, which continued to face market share pressures in the period, due to formulary-access changes.

Product Sales in Europe, at $53m in the half, more than doubled while Emerging Markets sales stood at $26m.

Crestor

Product Sales declined by 5% in the half to $2,477m. The performance reflected ongoing generic competition and price pressures.

In the US, Crestor’s H1 Product Sales declined by 7% to $1,374m, with price pressures exacerbated by lower volumes that were in line with total prescription share; inventory movements also impacted the performance. Market share was maintained in the second quarter however, with a 1% point growth in new-to-brand share since the start of the year. In Europe, Product Sales declined by 7% to $469m, reflecting prevailing competitive trends.

Crestor consolidated its position as the leading statin in Japan, growing its sales by 6% in the half. Emerging Markets delivered sales growth of 5% at $352m, including 21% in China.

Oncology

Iressa

H1 Product Sales declined by 3% to $273m, primarily a function of the competitive environment in Europe where sales were down by 5%, and in Japan down by 14%. The latter territory saw a material swing in performance from quarter to quarter, with year-on-year growth of 9% in Q2.

Emerging Markets grew by 3% with Product Sales of $139m, with particular growth in China, up 5% and Russia, up 23%.

Lynparza

Product Sales reached $30m following the launch in the US at the end of 2014. Growth has been driven by the pool of eligible patients awaiting treatment as well as patients newly-tested for BRCA mutation. Over 1,000 patients have already been treated with Lynparza in the US for germline BRCA-advanced ovarian cancer with three or more lines of chemotherapy.

Zoladex

Product Sales in the half were up 9% to $409m. Notable performances included growth of 36% in China where Product Sales reached $60m.

Faslodex

Product Sales for the half were up 5% to $333m. A 1% rise in European sales to $101m was complemented by 2% growth in the US where Product Sales reached $165m.

The notable performance was in Emerging Markets, where sales of $42m represented a growth rate of 32%, an encouraging result alongside the approval of 500mg Faslodex in China in May 2015.

ING

Nexium

Overall H1 Product Sales fell 27% to $1,291m, with Q2 sales similarly down 27% at $647m. The decline was particularly felt in the US, where sales in the half fell 49% to $479m, reflecting the loss of exclusivity in February 2015 which directly impacted both pricing and volumes. In Q2 this resulted in an increase to the estimate for pipeline inventory returns, although the value of the level of business and volume maintained remains at a high level. Sales in Europe fell 10% in the half to $143m.

Product Sales in markets outside the US delivered a positive result, with H1 Latin American sales up 17%, Japan sales up 16% and China sales up 3%. Emerging Markets represent a key opportunity for Nexium, with the brand’s sales totalling $397m in the half.

Seroquel XR

Product Sales declined by 7% in the half to $526m, with similar falls in each quarter. In the US H1 sales were up 2% to $353m where the performance was mainly driven by a higher underlying net price.

The majority of the remainder of the brand’s sales are in Europe, where a H1 sales decline of 25% to $113m was driven primarily by competition from generic products.

Synagis

Product Sales fell 28% in the half to $270m, reflecting the 38% decline in the US where the majority of sales are made. A significant factor was lower demand related to the American Academy of Pediatrics Committee on Infectious Disease guidelines issued in mid-2014. These further restricted patients eligible for preventative therapy with Synagis. While these guidelines were inconsistent with the approved label, demand was significantly impacted; this is anticipated to continue in the second half. Product Sales in Europe fell 6% to $110m.

Regional Product Sales

________________________________________________________________________________

US

Product Sales in the half were down 9% to $4,525m, with an encouraging trend in sales illustrated by only a 3% fall in the second quarter. Excluding the impact of the change in accounting related to the Branded Pharmaceutical Fee, Product Sales in the quarter were down 1% versus the comparative period.

The headline decline in sales however reflected the loss of Nexium patent exclusivity, competition facing Crestor from therapeutic substitution by generic statins, the adverse impact of the Synagis guideline changes and the aforementioned change in accounting related to the Branded Pharmaceutical Fee. Onglyza sales also declined in the second quarter due to ongoing competition in the diabetes market.

These declines were partly offset by growth in Brilinta, Bydureon, Farxiga, Lynparza and the inclusion of Tudorza and Daliresp. Brilinta growth was driven by strong consecutive quarters of growth in total and new-to-brand prescription market share gains. Bydureon continues to benefit from the launch of the Bydureon Pen as well as growth in demand in the overall GLP-1 class. A strong acceleration in Farxiga sales reflected continued growth in demand underpinned by additional promotional activity. With Lynparza exceeding the 1,000 patient milestone, it was encouraging to see the early benefit to patients from a pipeline due to launch a number of important medicines in the US in the near term.

Europe

Product Sales in the half were down 5% to $2,601m. Strong growth from Forxiga and Onglyza was more than offset by continued generic competition facing Crestor and Seroquel XR. An 8% decline in Symbicort sales reflected adverse pricing movements driven by competition from analogues in key markets.

Established ROW

Product Sales were down 2% in the first half to $1,491m. Following a decline in the first quarter, Japan Q2 sales increased by 6%, reflecting the passing of the anniversary of the mandated April 2014 biennial price cut.

Nexium and Crestor continue to grow strongly in Japan, growing by 16% and 6% in the half, respectively. Crestor’s growth reflected a continued increase in the usage of the 5mg dosage.

Canada Product Sales grew by 6% to $273m in the half, driven by the performances of Onglyza and Symbicort.

Emerging Markets

The Company continues to focus on delivering innovative medicines by accelerating investment in its Emerging Markets’ capabilities, with a focus on China and other leading markets, such as Russia and Brazil.

Product Sales were up 14% to $2,967m in the half with growth across the region. China sales in the half increased by 19% to $1,309m, more in line with recent trends, with the Company’s medicines for respiratory, cardiovascular and diabetes diseases delivering particularly strong results. Russia sales were up 30% to $116m, while Brazil sales were up 15% to $206m.

Q2 Product Sales were up 9% to $1,434m. China sales were up 10% to $583m, with slower growth after a 28% growth in Product Sales in the first quarter.

Financial Performance

________________________________________________________________________________

Gross Profit

Core gross profit increased by 3% in the half to $10,446m. Excluding the impact of externalisation, the Core gross profit margin increased by 1% point. Drivers of the margin increase included the mix of Product Sales, the contribution from the growth platforms and additional manufacturing efficiencies.

Operating Expenses

Core R&D costs were up 24% in the half to $2,636m as the Company continued its accelerated investment in the pipeline. The Company anticipates a lower growth rate in the second half of the year.

Core SG&A costs were up 4% to $4,584m in the half as the Company continued to invest in the product launch programme and the growth platforms; costs declined by 1% in the second quarter, reflecting the third successive quarter of falling Core SG&A costs as a proportion of Total Revenue. In the second quarter, Core SG&A costs represented 35% of Total Revenue, compared to 39% in Q1 2015 and 44% in Q4 2014.

The Company is committed to reducing Core SG&A costs in 2015 versus the prior year, both in terms of absolute value and, importantly, relative to Total Revenue. A number of programmes designed to meet this target are in progress. These initiatives are centred on:

-         Sales, marketing and medical-cost effectiveness

-         Centralisation of selected functions and process improvements

-         Reduced third-party spend

-         Additional efficiencies gained across support functions and IT

-         Continued footprint optimisation, including presence in the UK and US

Resources are being deployed more opportunistically to meet changing customer needs and the evolving portfolio, while driving top-line growth more efficiently.

Other Operating Income

Core Other Operating Income of $553m in the half included gains on the disposal of Myalept ($193m) and other disposals amounting to $120m, including the US rights to Tenormin.

Operating Profit

Core Operating Profit was down 4% to $3,618m in the half. Core Operating Margin declined by 1.5% points to 29.3% of Total Revenue as the Company continued to invest in the pipeline and the growth platforms.

Finance Expense

Core net finance expense was $250m versus $267m in the first half of 2014. Reported net finance expense of $513m included a charge of $263m relating to the discount unwind on contingent consideration creditors recognised on business combinations, principally relating to the acquisition of BMS’s share of the global diabetes alliance last year.

Taxation

Excluding the one-off tax benefit of $186m following settlement of past years’ US federal tax liabilities, both the Core and Reported tax rates for the half year were around 20%. Including the impact of this benefit, the Core and Reported tax rates for the half year were 14% and 7% respectively. The cash tax paid for the half year was $782m, which is 59% of Reported Profit Before Tax and 23% of Core Profit Before Tax.

The Core and Reported tax rates for the first half of 2014 were 19% and 21% respectively when excluding the impact of a one-off tax benefit of $117m in respect of prior periods following the inter-governmental agreement of a transfer pricing matter. Including the impact of this benefit, the Core and Reported tax rates for the first half of 2014 were 16% and 13% respectively. The cash tax paid for the first half of 2014 was $736m, which was 49% of Reported Profit Before Tax and 20% of Core Profit Before Tax.

Earnings Per Share (EPS)

Core EPS in the half was stable at $2.29, a favourable performance versus Core Operating Profit due to a one-off tax benefit in the second quarter. Reported Operating Profit of $1,856m was 1% higher than the first half of 2014. Reported EPS was up by 2% at $0.99.

Productivity

Restructuring charges of $448m were taken in the first half of 2015, including $101m incurred on initiatives identified since the announcement of the fourth wave of restructuring.

The Company continues to make good progress in implementing the fourth wave of restructuring that was announced in 2013 and expanded in 2014. It remains on track to incur $3.2bn in one-time restructuring costs and to deliver annualised benefits of $1.1bn by the end of 2016. In addition to the fourth wave of restructuring an additional $600m of costs are estimated to be incurred by the end of 2016 (of which $362m has been incurred to date) associated with previously-announced site exits (including Avlon in the UK) and the integration of businesses acquired since the beginning of 2014.

It is anticipated that, once completed, the total annualised benefits of these additional actions will be $200m, bringing the total annualised benefit of all ongoing restructuring activities to $1.3bn by the end of 2016.

Cash Flow

The Company generated a cash inflow from operating activities of $1,008m in the half, compared with an inflow of $3,266m in the first half of 2014, reflecting the operational performance of the business. Net cash outflows from investing activities were $1,234m compared with $4,955m in the first half of 2014, primarily reflecting the acquisition of the BMS share of the global diabetes alliance last year. The Company has embarked upon an initiative to further improve cash generation from the business including standardisation of global processes and payment terms.

Net cash distributions to shareholders were $2,337m through dividends of $2,357m, offset by proceeds from the issue of shares of $20m due to the exercise of stock options.

Debt and Capital Structure

At 30 June 2015, outstanding gross debt (interest-bearing loans and borrowings) was $11,008m (30 June 2014: $10,074m). Of the gross debt outstanding at 30 June 2015, $2,705m was due within one year (30 June 2014: $2,500m).

The Company’s net debt position at 30 June 2015 was $5,994m (30 June 2014: $3,959m).

Shares in Issue

During the half, 0.5 million shares were issued in respect of share option exercises for a consideration of $20m. The total number of shares in issue at 30 June 2015 was 1,264 million.

Dividends

The Board has recommended an unchanged first interim dividend of $0.90 (57.5 pence, 7.71 SEK) per Ordinary Share.

For holders of the Company’s American Depositary Shares (ADSs) this equates to $0.45 per ADS. Following the ratio change to the Company’s NYSE-listed sponsored Level 2 American Depositary Receipt programme on 27 July 2015, two ADSs equal one Ordinary Share.

The level of the dividend per share reflects the Board’s aim of setting the first interim dividend at around a third of the prior-year dividend, which for FY 2014 was $2.80 per Ordinary Share.

The Board has adopted a progressive dividend policy, by which the Board intends to maintain or grow the dividend per share each year. In adopting this policy, the Board recognises that some earnings fluctuations are to be expected as the Company’s revenue base transitions through a period of exclusivity losses and new-product launches.

In setting the distribution policy and the overall financial strategy, the Board’s aim is to continue to strike a balance between the interests of the business, financial creditors and the Company’s shareholders. After providing for business investment, funding the progressive dividend policy and meeting debt-service obligations, the Board will keep under review the opportunity to return cash in excess of these requirements to shareholders through periodic share repurchases. However, the Board has decided that no share repurchases will take place in 2015 in order to maintain the strategic flexibility to invest in the business.

FY 2015 Guidance

The Company today revises its Total Revenue guidance at CER from that provided on 24 April 2015. Total Revenue in the full year is now expected to decline by low single-digit percent versus the prior guidance of a mid single-digit decline. Core EPS guidance at CER for the year is unchanged and Core EPS is expected to increase by low single-digit percent, reflecting the continued accelerated investment in R&D.

The Company also provides the following non-guidance information related to currency sensitivity: Based on current exchange rates1, Total Revenue is expected to decline by high single-digit percent with Core EPS expected to be broadly in line with FY 2014. For additional currency sensitivity information, please see below:

1 Based on average daily spot rates YTD to the end of June 2015

2 Based on 2014 actual average exchange rates and group currency exposures

3 Other important currencies include AUD, BRL, CAD, KRW and RUB

Related Party Transactions

There have been no significant related party transactions in the period.

Principal Risks and Uncertainties

It is not anticipated that the nature of the principal risks and uncertainties that affect the business, and which are set out on pages 205 to 219 of the Annual Report and Form 20-F Information 2014, will change in respect of the second six months of the financial year.

In summary, the principal risks and uncertainties listed in the Annual Report and 20-F Information 2014 are:

a) Product pipeline risks

Failure to meet development targets; difficulties of obtaining and maintaining regulatory approvals for new products; failure to obtain and enforce effective intellectual property protection; delay to new product launches; strategic alliances and acquisitions may be unsuccessful.

b) Commercialisation and business execution risks

Challenges to achieving commercial success of new products; illegal trade in our products; developing our business in Emerging Markets; expiry or loss of, or limitations on, intellectual property rights; pressures resulting from generic competition; effects of patent litigation in respect of intellectual property rights; price controls and price reductions; economic, regulatory and political pressures; biosimilars; increasing implementation and enforcement of more stringent anti-bribery and anti-corruption legislation; any expected gains from productivity initiatives are uncertain; changes in senior management, failure to attract and retain key personnel and failure to successfully engage with our employees; failure of information technology; failure of outsourcing.

c) Supply chain and delivery risks

Manufacturing biologics; difficulties and delays in the manufacturing, distribution and sale of our products; reliance on third parties for goods.

d) Legal, regulatory and compliance risks

Adverse outcome of litigation and/or governmental investigations; substantial product liability claims; failure to adhere to applicable laws, rules and regulations; failure to adhere to laws, rules and regulations relating to anti-competitive behaviour; environmental and occupational health and safety liabilities; misuse of social media platforms and new technology.

e) Economic and financial risks

Adverse impact of a sustained economic downturn; political and socio-economic conditions; impact of fluctuations in exchange rates; limited third party insurance coverage; taxation; pensions.

Condensed Consolidated Statement of Comprehensive Income

* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)

Condensed Consolidated Statement of Comprehensive Income

* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Cash Flows

Condensed Consolidated Statement of Changes in Equity

* Other reserves include the capital redemption reserve and the merger reserve.

Responsibility Statement of the Directors in Respect of the Half-Yearly Financial Report

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and as issued by the International Accounting Standards Board;
• the half-yearly management report includes a fair review of the information required by:

The Board

The Board of Directors that served during all or part of the six-month period to 30 June 2015 and their respective responsibilities can be found on pages 28 and 29 of the AstraZeneca Annual Report and Form 20-F Information 2014, with the exception of Cori Bargmann who was elected as Non-Executive Director and appointed as a member of the Science Committee on 24 April 2015. Also on 24 April 2015, Rudy Markham became Senior independent Non-Executive Director, Graham Chipchase became Chairman of the Remuneration Committee and a member of the Nomination and Governance Committee, Bruce Burlington became Chairman of the Science Committee and a member of the Nomination and Governance Committee and Geneviève Berger took on the oversight of sustainability matters on behalf of the Board.

Approved by the Board and signed on its behalf by

Pascal Soriot

Chief Executive Officer

30 July 2015

Independent Review Report to AstraZeneca PLC

Introduction

We have been engaged by the Company to review the condensed set of Interim Financial Statements in the half-yearly financial report for the six months ended 30 June 2015 (but not for the quarter ended 30 June 2015 as presented in the Condensed Consolidated Statement of Comprehensive Income for the quarter ended 30 June 2015) which comprises Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Cash Flows, Condensed Consolidated Statement of Changes in Equity and Notes 1 to 6. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ('the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU") and as issued by the International Accounting Standards Board ("IASB"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and as issued by the IASB.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and as issued by the IASB, and the DTR of the UK FCA.

Antony Cates

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London E14 5GL

30 July 2015

Notes to the Interim Financial Statements

1      BASIS OF PREPARATION AND ACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements (“interim financial statements”) for the six months ended 30 June 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU) and as issued by the International Accounting Standards Board (IASB).

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and as issued by the IASB. Except as detailed below, the interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group’s published consolidated financial statements for the year ended 31 December 2014.

Externalisation revenue

As announced on 6 March 2015, the Group updated its revenue accounting policy with effect from 1 January 2015. The Group’s business model now includes an increasing level of externalisation activity to create value from the strong science that exists in the pipeline. Historically, reported revenue reflected only product sales, with externalisation revenue forming part of other operating income presented below gross profit. From 1 January 2015 externalisation revenue, alongside product sales, are included in total revenue. Externalisation revenue includes development, commercialisation, partnership and out-licence revenue, such as royalties and milestone receipts, together with income from services or repeatable licences. Income is recorded as externalisation revenue when the Group has a significant ongoing interest in the product and/or it is repeatable business and there is no derecognition of an intangible asset. Disposals of assets and businesses, where the Group does not retain an interest, will continue to be recorded in other operating income. The updated financial presentation reflects the Group’s entrepreneurial approach and provides a clearer picture of this additional revenue stream. The updated revenue accounting policy results in a presentational change to the Statement of Comprehensive Income only, and has no impact on the Group’s net results or net assets. The prior period Condensed Consolidated Statement of Comprehensive Income has been restated accordingly, resulting in $352m of income being reclassified from other operating income to externalisation revenue for the half year ended 30 June 2014, and $308m for the quarter ended 30 June 2014.

New accounting standards

The Group has adopted the amendments to IAS 19 Employee Benefits, issued by IASB in November 2013 and effective for periods beginning on or after 1 July 2014. The adoption has not had a significant impact on the Group’s profit for the period, net assets or cash flows. There have been no other significant new or revised accounting standards applied in the half year ended 30 June 2015.

Legal proceedings

The information contained in Note 5 updates the disclosures concerning legal proceedings and contingent liabilities in the Group’s Annual Report and Form 20-F Information 2014.

Going concern

The Group has considerable financial resources available. As at 30 June 2015 the Group has $4.3bn in financial resources (cash balances of $4.0bn and undrawn committed bank facilities of $3.0bn which are available until April 2020, with only $2.7bn of debt due within one year). The Group’s revenues are largely derived from sales of products which are covered by patents which provide a relatively high level of resilience and predictability to cash inflows, although our revenue is expected to continue to be significantly impacted by the expiry of patents over the medium term. In addition, government price interventions in response to budgetary constraints are expected to continue to adversely affect revenues in many of our mature markets. However, we anticipate new revenue streams from both recently launched medicines and products in development, and the Group has a wide diversity of customers and suppliers across different geographic areas. Consequently, the Directors believe that, overall, the Group is well placed to manage its business risks successfully.

On the basis of the above paragraph and after making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for a period of at least 12 months. Accordingly, the interim financial statements have been prepared on a going concern basis.

The comparative figures for the financial year ended 31 December 2014 are not the Company’s statutory accounts for that financial year. Those accounts have been reported on by the Group’s auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2    restructuring costs

Profit before tax for the half year ended 30 June 2015 is stated after charging restructuring costs of $448m ($235m for the second quarter of 2015). These have been charged to profit as follows:

3    Net DEBT

The table below provides an analysis of net debt and a reconciliation of net cash flow to the movement in net debt.